From the course: Content Marketing: ROI

The content marketing ROI formula

From the course: Content Marketing: ROI

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The content marketing ROI formula

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- [Instructor] In marketing, awareness is great but sales are what we really want. So how do you know that your investment in content marketing is producing your desired sales? It's by evaluating ROI or return on investment. ROI measures the return or sales that result from your investment in content. It's important to calculate ROI because more than likely, you'll need to show stakeholders that ROI for your content marketing in order to justify the continued spend. Before you can calculate ROI, you'll need the following information. One is the cost of the investment which is the amount spent to create and promote the content. The other is net profit which is sales revenue minus the cost of the investment. Now to calculate ROI, you can simply do the following: divide your net profit from the content marketing by the cost of investing in the content. Let's walk through an example on calculating content ROI. Topsy Turvy Cake Design generated $150,000 in sales from their cake decorating tutorial video series. They promoted the series online and posted in their social media pages and website to generate registrations. First, let's examine their cost. They spent $30,000 to create the videos, $20,000 to develop the video hosting site, and $30,000 to promote the tutorial series online for four months. In total, they spent $80,000 for the campaign. Next we subtract the $80,000 spent from the $150,000 in sales to get a net profit of $70,000. Finally, to determine Topsy's ROI, we divide the $70,000 in net profit by the $80,000 investment costs to get 88% in ROI for their content marketing efforts. Based on these results, Topsy decided it would continue investing in the tutorial campaign. Calculating ROI lets you determine the revenue and return your content marketing is contributing to your company. It also gives insight into where it makes sense to invest future marketing dollars. As a result, you should continuously evaluate ROI throughout your campaign to make sure you're delivering the intended value.

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